Extra lending question

thecakelady

getmore4less wrote: »

Income, age and affordability are the usual measures

Lack of savings often means not a lot of spare cash flow to fund more debt.

Yep get that but what I don't get is why the inherited house's value cannot be taken into consideration in looking at our finances. My husband has a tenant waiting to move into the house, we could be getting income from the property within a month or two and easily be paying the monthly mortgage repayment, insurance etc. That is what is so frustrating.

thecakelady

silvercar wrote: »

I'd consider whether he would be happy with tenants who were not as respectable to the property as he would like them to be. Sounds like he is too emotionally attached to the place to be comfortable with letting strangers consider it their home.

He is emotionally attached yes I agree. Personally I would have considered selling it but its not my decision and can see that once its sold there's no going back whereas with renting it out we still have the option to sell at a later date.

thecakelady

dharper81 wrote: »

Could you not take a personal loan?

£10,000 @2.9% with Sainsburys will be £179 a month for 60 months.

You could even pay the balance faster with the remainder of the rental receipts.

Why is the existing lender refusing to lend more? Do you have bad credit history/missed payments etc?

That may be an option, I haven't looked into that yet as monthly payments higher than if we could borrow on the mortgage.

I'm assuming existing lender refusing to lend more because of monthly income/outgoings. We have a good credit history and no missed payments on anything ever. We had paid mortgage off on our own property over 15 years ago and only had a further advance 4 years ago to put a new kitchen in.

rtho782

You have a few issues.

I think I'm right in saying you'd need a regulated BTL mortgage to take out a mortgage on the rental property as you did not purchase it to let it. This is hard to find.

So you need to get the mortgage on your main (living in) house, but this won't be secured on the new house so the value of the new house is not relevant in the least.

As Nationwide won't touch you for another £10k when you only have a £7k mortgage, your affordability must be very tight due to either low wages or large other debts. You probably can find another lender, but this should ring massive alarm bells to you already. If your finances are tight, with the best will in the world can you say for certain that an extra £700 income will mean £700 saving into a nest egg or will your expenditure just expand by £700?

A rental property carries with it a massive risk. You are responsible for someone else's home, and if it breaks, you have to fix it, or potentially house them in a hotel as you've breached contract, or be sued for damages.

A personal loan is probably just as cheap as a mortgage (APR wise) these days, but will be over a much shorter term, which probably isn't a bad thing.

Lastly, you said you only needed £2k or so for this house, but you also said you wanted a new kitchen and carpets etc. Unless by kitchen you mean some cardboard boxes gaffa taped to the walls and by carpets you mean some crepe paper left on the floor, I don't think you can do it all for £2k.

I recently fitted a small section of kitchen myself (5 cupboards, 5 wall cupboards, a larder) getting trade prices for the kitchen (father in law has a trade account at B+Q) and already having the worksurface (it was a breakfast bar) and paid ~£1400 for the units. We carpeted 1 bedroom and the lounge, that was ~£1600, although we did decent carpets and underlay.